OPERF considers how to increase industrial real estate exposure

Oregon Public Employees Retirement Fund (OPERF) is mulling how to increase its exposure to industrial property as it plans to make up to $1bn (€877m) of real estate commitments in 2019.

According to a statement from an official with the Oregon Investment Council, a significant portion of the $1bn earmarked for real estate this year could be directed to the industrial sector.

It could invest via open-ended funds or separate accounts.

Lincoln Property Company currently manages an industrial property portfolio on behalf of OPERF, but the pension fund has yet to make a decision on whether to continue the relationship which was established in 2000.

The industrial portfolio was valued at $668m on 30 June 2018 and has produced an internal rate of return of 11.7%.

A number of large public pension funds in the US are grappling with the challenge of increasing their exposure to industrial property, according to market sources.

The sector is expected to outperform other real estate markets, due to leasing demand outstripping supply, but average lot sizes of between $10m and $20m make it difficult to build significant exposure quickly.

Industry sources point to the recent partnership between JP Morgan Asset Management and Black Creek Group, which was designed to help increase the JP Morgan Strategic Property Fund’s exposure to industrial property.